Netflix: A Success Story

netflix business strategy

Netflix founder Reed Hastings had a clear idea of the future of ​​television and film consumption, and designed a breakthrough technological architecture that would support the services he wanted to offer his clients.

It implemented its aforementioned architecture, innovating without limits, and being the envy of the sector and the technological panorama in general, to the point that it has become the the mecca of technical employment. But Netflix is not only the envy of the tech community,  it has also revolutionized the way we consume TV series and movies. Today, we’ll take a look at how Netflix has become the breakthrough company that it is, and how it can offer lessons to others.

From DVDs on the Blockbuster video store shelves to movies and series streaming from your living room

Netflix was born with the idea of ​​revolutionizing the way we consume video content. It is designed a new concept, and endowed it with a technological platform that ended up unseating giants like Blockbuster. Similar to Steve Jobs, Netflix invented a product that we didn’t know we already wanted – video streaming.

Obviously, the success of Netflix is ​​in its great technological capacity, but also in its visionary marketing. But don’t think that Netflix has been a brilliant success since its inception. Netflix is ​​a company that was created in the nineties, with business models based on DVDs, and with very rudimentary and slow internet connections. Part of its success story can be attributed to the fact that it the company knows how to reinvent itself, and do so without putting itself a too far ahead of the curve.

But let’s start by briefly analyzing the technological component that has served Netflix as a fundamental base to sustain all its success. Netflix has bet heavily on open-source software, for which an important part of the software they have developed, to serve their platform, which they’ve made available to the general public.

Design and IT architecture as the best example of customer service and the final product

Netflix started innovating from the most fundamental premises that supported its technological architecture – Server redundacy.  The industry invested huge amounts of money to achieve very reliable clusters that would not collapse at any time. But Netflix began to innovate with architectures that happened to invest in the opposite approach: that if a server went down, its service wouldn’t be affected. They went on to deploy architectures of many simple nodes and lower costs, which can be easily replicated and put into service when another node serversAs a sign of this commitment, Netflix even put into practice test methodologies that were the terror of other companies (including technology). While suffering an unscheduled server crash was the scenario to avoid and a nightmare for any IT department, on Netflix, it is usual to intentionally pull servers down, to see what happens, to see whether its architecture was indeed sufficiently secure and if it continued service without hiccups.

These tests are also put into practice by other giants of the sector such as Amazon Web Services. The rule is: it is better to do it by learning to be prepared for an eventuality, to have it happen at the most unexpected moment.

Scalability is doubly important for a business like Netflix, since streaming video not only consumes a high bandwidth on the internet information highways on which it travels, but also involves a very high computational load on the backend servers where it is stored. To get an idea of ​​the great burden that this implies at the infrastructure level, consider what a movie is about, and that every minute there are millions of Netflix customers watching millions of different movies that start to be played at any moment. What Netflix has achieved, effectively, is a state-of-the-art platform.

What Netflix leaves for the (ephemeral) technological posterity and for the community

We will close the most (lightly) technical part of this analysis just by citing some examples of those great and innovative architectures that Netflix has left as open source for posterity (paradoxically always ephemeral in the technological world, of course). Rather than dig into the details, I’ll just say that their “Eureka” and “Zuul” innovations, which can be found on Github are gifts they leave to the community that expose freely how they are able to power their redundant and scalable architecture.


Apart from these open source contributions, of course we must take into account that Netflix contributes heavily to the open source community; a community with which they interact and share that excellent professional career and knowledge that they are developing in a leading global company such as Netflix.

And all this (somewhat) complex technical scenario is what is behind your television so you can watch your favorite series and movies streaming without interruption. It may seem that it is killing flies with cannon fire, but it is not at all. In technology, the things that are done right from the beginning end (usually) well.

The time has passed by which the users tolerated a mediocre service in exchange for enjoying new technology; Today the user is more demanding than ever. And in addition, there is the applicability of all the advances and technologies that Netflix has developed. This is undoubtedly the best face of technology and collaborative development.

Stay tuned for part 2 where we highlight the business of Netflix, most notably its HR and marketing strategy.


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